With June 30 just around the corner, we want to ensure the run towards end of financial year is as smooth as possible for you. Below we have included a few things you might want to check with your Financial Adviser before June 30 rolls around.
Topping up your superannuation
Saving more in super can come with tax and other benefits this financial year – but that’s just the start. Once money is invested in super, earnings are taxed at a maximum rate of 15% – instead of your marginal tax rate, which may be up to 47%. This low tax rate can help you build your savings for retirement.
Some strategies to consider include:
1. Tax Deductible Super contributions
a) Maximising your concessional contribution cap of $25,000 is a great way to build super and claim the tax benefits along the way.
b) Furthermore, in July 2019, the Government introduced the ability for individuals to access unused concessional contributions cap from 1 July 2018 on a rolling five year basis provided your total superannuation balance is less than $500,000. If you missed the opportunity to maximise your cap last Financial Year, this could be a great opportunity to top up your superannuation even further and claim a larger tax deduction! It could also be useful if you anticipate that your income will be greater this Financial Year than in future.
2. Spouse Contribution
If your spouse has assessable income below $40,000 this Financial Year, you may be eligible to receive a tax offset of up to $540. This is a great way to boost your spouse’s superannuation balance whilst also paying less in tax.
3. Government Co-Contribution
If you earned less than $53,564 this Financial Year, you may be entitled to a government co-contribution for any after-tax contribution you make. Under certain criteria, a $1,000 contribution will be matched by a $500 co-contribution, which is a 50% return!
4. Non-Concessional Contribution
For the current Financial Year, you can contribute up to $100,000 as a non-concessional (or after-tax) contribution into super, with the ability to “bring forward” two years of non-concessional contributions and contribute $300,000 in one go. This is a great way to boost your superannuation balance and have more of your funds in a tax-effective environment.
Before you add to your super, keep in mind that you won’t be able to access the money until you meet certain conditions. Please speak with your Financial Adviser to determine the suitability of the above strategies for your situation.
Prepaying interest on your margin loan
If you have a margin loan in place now could be the time to prepay the interest on your loan and claim the interest as a tax deduction.
Paying more interest on a margin loan now, rather than later, is also a good strategy for those who know they probably won’t earn as much next financial year.
Donations of $2 or more are tax deductible
If you usually give to charity and haven’t yet, now is the time to consider if this is something you would like to do. Making your donation to a registered charity before June 30 will ensure that you can claim the tax deduction in your 2019-20 tax return.